iSuppli: iPad costs as little as $259.60 to manufacture

When Steve Jobs first introduced the iPad to the world, the Apple CEO made a big deal out of the $499 asking price, suggesting Apple had made an exceptional effort to start the device at an affordable price point. Judging from the details of an iSuppli "teardown" quoted by BusinessWeek, however, Apple may not have renounced its traditionally high margins.

The iSuppli teardown suggests the hardware that makes up the cheapest iPad variant costs "as little as $259.60," almost half the retail price. The 32GB, $599 model is similarly cheap to build, with an estimated bill-of-materials cost of $289.10, while components for the 64GB, $699 iPad purportedly add up to $348.10.

Admittedly, none of those three figures include software design, hardware design, and marketing costs. Apple presumably spent a decent chunk of change just developing its own system-on-a-chip for the iPad, the A4. (That chip seems likely to appear in future Apple handhelds, though.)

Relaying the iSuppli findings, BusinessWeek adds that the iPad's priciest single component is its 9.7" multi-touch display. The story quotes iSuppli's Andrew Rassweiler, who supervised the teardown, as saying the screen's design "makes it about twice as expensive as the screens used in comparably sized netbook computers." Part of that cost difference may stem from the display's IPS panel, which costs more but delivers better color reproduction than the TN panels found in virtually all netbooks and cheap notebooks.